Harvard Business Review Article - Volkswagen Case Analysis
1) What is your assessment of the new process for managing priorities at Volkswagen of America? Are the criticisms justified? Is it an improvement over the old process?
The new process that was instituted to prioritize IT projects at Volkswagen of America is very well organized. It takes an IT project and looks at it from multiple aspects, from business to IT. It also allows for several departmental entities to play a more active role in tying in business objectives with stated benefits of the IT project. As stated in Applegate, “IT governance is the effort to devise an overarching and integrated approach, addressing broad themes such as operating performance, strategic control, risk management, and values alignment.” (Applegate, 403) In tying it to the case we can see this was the goal of the new process, to tie in business goals with the IT projects. As with the problem with Volkswagen and other company, many times IT’s objectives isn’t in line with what is best for the business as a whole.
As Applegate best states it “The need for a system of governance is partially driven by what we refer to as the agency problem: the fact that the physical separation between the owners of a company and its managers (or agents) provides those managers the opportunity to act in ways that are advantageous to themselves but detrimental to the interests of the owners.” (Applegate, 404) Volkswagen of America needs to separate the governance of the agency problem to help mitigate control and properly asses were to best spend IT’s limited resources. Often projects may not provide enough added benefits to be justified into the budget, therefore this process is in place to help mitigate that risk and ensure all projects conform to providing value to the company and its stakeholders. “Governance aims to ensure that managers and employees faithfully translate strategies into operational initiatives throughout the organization, that they protect organizational assets and use them
The new process that was instituted to prioritize IT projects at Volkswagen of America is very well organized. It takes an IT project and looks at it from multiple aspects, from business to IT. It also allows for several departmental entities to play a more active role in tying in business objectives with stated benefits of the IT project. As stated in Applegate, “IT governance is the effort to devise an overarching and integrated approach, addressing broad themes such as operating performance, strategic control, risk management, and values alignment.” (Applegate, 403) In tying it to the case we can see this was the goal of the new process, to tie in business goals with the IT projects. As with the problem with Volkswagen and other company, many times IT’s objectives isn’t in line with what is best for the business as a whole.
As Applegate best states it “The need for a system of governance is partially driven by what we refer to as the agency problem: the fact that the physical separation between the owners of a company and its managers (or agents) provides those managers the opportunity to act in ways that are advantageous to themselves but detrimental to the interests of the owners.” (Applegate, 404) Volkswagen of America needs to separate the governance of the agency problem to help mitigate control and properly asses were to best spend IT’s limited resources. Often projects may not provide enough added benefits to be justified into the budget, therefore this process is in place to help mitigate that risk and ensure all projects conform to providing value to the company and its stakeholders. “Governance aims to ensure that managers and employees faithfully translate strategies into operational initiatives throughout the organization, that they protect organizational assets and use them